Five individuals and five corporations have been charged for allegedly importing hazardous and counterfeit toys from China for sale in the United States. These charges stem from an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP), the Consumer Product Safety Commission (CPSC) and the New York City Police Department (NYPD).

The 24-count indictment charges the following individuals and corporations:

The five individual defendants were arrested after law enforcement executed four search warrants and nine seizure warrants. Law enforcement searched the defendants’ warehouse, two residences and an email account. In addition, three luxury vehicles, including a Porsche and Lexus, three personal bank accounts and three corporate accounts were seized.

“The people and companies involved in this illegal trade not only allegedly infringed on intellectual property rights, they placed the lives of innocent children in danger,” said James T. Hayes Jr., special agent in charge of HSI New York. “They allegedly sold toys with high lead content and cheap knock offs with substandard parts that break easily and pose a choking hazard. HSI is firm on using its unique customs expertise and law enforcement partnerships to put an end to the importation and sale of dangerous goods.”

“The defendants are accused of importing and selling toys that posed significant health hazards to children or were the product of blatant intellectual property theft,” said Assistant Attorney General Lanny Breuer, U.S. Justice Department’s Criminal Division. “They allegedly retooled their operations many times in order to avoid detection, and despite repeated citations by the authorities, they continued to peddle counterfeit toys featuring Dora the Explorer, SpongeBob SquarePants and other popular children’s characters. Today’s actions reflect a Justice Department focused on ensuring that consumers receive safe and legitimate goods.”

“For years, the defendants sought to enrich themselves by importing and selling dangerous and counterfeit children’s toys without regard for the law or the health of our children,” said U.S. Attorney Loretta E. Lynch, Eastern District of New York. “Profits from the counterfeit items, as well as toys riddled with lead and choking hazards, went to provide the defendants with luxury cars. We stand committed to protecting the residents of our communities from those who would engage in such conduct.”

“Customs and Border Protection is on the forefront of intercepting unsafe, counterfeit products,” said Robert E. Perez, director of CBP Field Operations in New York. “We are proud to have done our part preventing these dangerous toys from getting in the hands of our children.”

“Today’s action highlights the unprecedented level of cooperation and coordination among federal regulatory and law enforcement partners to keep U.S. consumers safe,” said CPSC Chairman Inez Tenenbaum. “The United States has some of the strongest toy standards and lowest lead limits in the world, and CPSC is committed to enforcing these child safety requirements at the ports and in the marketplace.”

The indictment charges that from July 2005 through January 2013 the individual defendants used their companies – the corporate defendants – to import toys from China. They sold these toys – both wholesale and retail – from a storefront and warehouse in the Ridgewood section of Queens, and other locations in Brooklyn and Queens.

According to the indictment, the defendants’ companies had children’s toys seized by CBP officers from shipping containers entering the United States from China on 33 separate occasions.

Seventeen of the 33 seizures were of violative toys – toys prohibited from import into and distribution in the United States, under laws and regulations enforced by the CPSC – because of excessive lead content, excessive phthalate levels, small parts that presented choking, aspiration or ingestion hazards and easily accessible battery compartments.

Sixteen of the 33 seizures were of toys bearing copyright-infringing images and counterfeit trademarks, including knockoff versions of toys featuring a wide variety of popular children’s characters, including: Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse and Pokémon. They also sold toys from well-known movies including: Cars, Toy Story and High School Musical.

image: ICE

The indictment charges that following each of the 33 seizures, the violator toy company was served written notice by CBP detailing the reason for the seizure, and a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods. Additionally, the violator company and its principal were served written notice by CPSC of the specific safety violations of the toys, and each time a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods.

Due to the number and volume of the seizures, the individual defendants allegedly shifted their use of the companies and alternated formal roles, in order to continue importing and distributing violative and infringing toys. Each time the number of seizures accumulated for one company, the individual defendants allegedly formed a new toy company to continue importing the counterfeit and hazardous toys.

In the indictment, the government is seeking forfeiture of the seized vehicles and bank accounts and the restrained properties, in addition to a money judgment to be determined at trial.

The case is being prosecuted by Trial Attorney Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Claire Kedeshian and William Campos of the Eastern District of New York.

This case was jointly investigated by HSI and the NYPD, through its participation in the New York Border Enforcement Security Taskforce, with the assistance of CPSC and CBP.